Three Charts On Why This Time Is 'Not' Different For Stocks

Tyler Durden's picture


We are constantly told that this time is different and we are on a sustainable magic carpet ride to growth, that stocks are merely 'stabilizing' to allow earnings to catch up with valuations, and that buying-the-dip is the obvious trade. However, as the three charts below indicate - its no different this time at all. As Barclays notes, VIX and credit markets are leaking exactly as they did in 2010 and 2011 in preemptive anticipation of the end of Twist (and LTRO) leaving stocks vulnerable to the real shocks of a real macro event risk world; equity performance remains too good to warrant a central bank response (as we just saw in the FOMC minutes) and TIPS breakevens are far above previous intervention levels; and while bank funding fears, growth slowdown concerns, and sovereign downgrade worries are supposedly lesser than in previous sell-off periods, we suggest they are absolutely rising in anxiety and that is the catalyst for the next leg down before the inevitable QE/LTRO occurs.

With central banks clearly stepping away and letting economies and markets fend for themselves, performance is much more vulnerable to negative developments...


And the hope that they will step in soon is unwise - as we remain significantly above previous Bernanke put strike moves and TIPS breakevens are considerably above previous intervention levels...

and key fundamental reasons for a sell-off do have some differences BUT those differences are even starting to look less and like differences and more and more like re-erupting again...

Source: Barclays

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Wed, 05/16/2012 - 14:39 | 2432501 sbenard
sbenard's picture

How dare you Tyler! This time MUST be different! Who needs an economy? We have PRINTED prosperity now!

(sarcasm off)

Wed, 05/16/2012 - 14:45 | 2432536 Michael
Michael's picture

Which came first, LTRO-3 or QE-3?

Wed, 05/16/2012 - 16:54 | 2433039 Xkwisetly Paneful
Xkwisetly Paneful's picture

Jews need hating somewhere! If not mini jew haters certainly need training.


From the masters of this time IS different,

the world is going to end and gold is going to replace the USD.

Place just goes from hysterical to farcical.

Wed, 05/16/2012 - 14:39 | 2432508 fonzannoon
fonzannoon's picture

Not for nothing but didn't the market(s) hold up for about a month after QE2 ended? I feel like this is coming early this time.

Wed, 05/16/2012 - 15:07 | 2432644 dmger14
dmger14's picture

The  half life of QE is diminishing.  Maybe the stock market boost from QE3 won't last a month, but by then the fiat fear will continue driving PMs higher as the great transfer of safety from treasuries to gold arrives?

Wed, 05/16/2012 - 16:56 | 2433054 Matt
Matt's picture

They've learned their lesson; it's all about FLOW, not STOCK.

The next intervention must be constant and accelerating until the growth is self-sustaining. 

A steady ramp right up to the edge of the cliff, I suspect.

Wed, 05/16/2012 - 14:42 | 2432511 resurger
resurger's picture

Who profited from JP Globals Loss?

The Hedge Funds, or there was a whale on the other side of the "Hedge"? I mean they all knew the crazy fucker was long the IG9

Anyone has an idea? Thnx

Wed, 05/16/2012 - 14:43 | 2432512 txsilverbug
txsilverbug's picture

Id like to print a new economy.. this one sucks.

Wed, 05/16/2012 - 15:06 | 2432635 Zero Govt
Zero Govt's picture

"..this one sucks"

Yep, the hoovering machine is called Govt

..been wrecking nations for Centuries but we'll never learn (see Greece voting to re-arrange the deckchairs on Govts Titanic)

Wed, 05/16/2012 - 14:44 | 2432518 Motorhead
Motorhead's picture

Charts, bitchez!

Wed, 05/16/2012 - 14:42 | 2432519 midgetrannyporn
midgetrannyporn's picture

Please, the first big move down and bernaked will ride to the rescue on his trusty donkey.

Wed, 05/16/2012 - 14:43 | 2432522 Bullish Bear
Bullish Bear's picture

Buy the Fucking Dip...

Wed, 05/16/2012 - 14:45 | 2432526 chancee
chancee's picture

ES not allowed to break down as usual...  Total BS price action.

Wed, 05/16/2012 - 14:49 | 2432544 resurger
resurger's picture

i think this Greece Crises is now played for MF Morgan to unwind some of the long positions, once the unload is complete .. Algo On ...

Wed, 05/16/2012 - 14:46 | 2432529 barliman
barliman's picture



How did the ? on the "State of the Banks - Exposure to Euro Area" not get circled?


Wed, 05/16/2012 - 14:46 | 2432532 twh99
twh99's picture

What happens to precious metals when the market goes down?

Wed, 05/16/2012 - 15:06 | 2432645 Zero Govt
Zero Govt's picture

they usually follow

'Risk Off' normally applies across the board

Wed, 05/16/2012 - 14:47 | 2432534 pleseus
pleseus's picture

A large correction is coming for equities, most likely after the Facebook hope filled bounce.

Wed, 05/16/2012 - 14:48 | 2432552 besnook
besnook's picture

the silver chart is tantalizing, though.

Wed, 05/16/2012 - 14:49 | 2432562 buzzsaw99
buzzsaw99's picture

I am completely unafraid. The fed has guaranteed that I shall never lose one thin dime nominal. Stocks are safer than bonds these days.

Wed, 05/16/2012 - 14:56 | 2432586 adr
adr's picture

From now on the definition will be as follows:

farce (n): global stock market 2009-2012

Wed, 05/16/2012 - 14:56 | 2432591 SheepDog-One
SheepDog-One's picture

Until theres a face-melting -1,000 point stock drop QE is shelved.

Nice chart though btw.

Wed, 05/16/2012 - 14:57 | 2432596 daugie54
daugie54's picture

"...equity performance remains too good to warrant a central bank response (as we just saw in the FOMC minutes) and TIPS breakevens are far above previous intervention levels;..."

Just to play devil's advocate - if Ben's goal is to pad the wealth effect with rising equity values, why would he wait until prior intervention levels to ease again? That simply creates ae sideways sawtooth pattern. If the intervention points are higher than before, he theoretically creates an upward sloping sawtooth, which would be his desired goal. 

I'm not saying it works, just trying to think like they do...  

Wed, 05/16/2012 - 14:59 | 2432617 buzzsaw99
buzzsaw99's picture

You win a kewpie doll.

Wed, 05/16/2012 - 15:00 | 2432624 midgetrannyporn
midgetrannyporn's picture

Have a cigar, you're gonna go far.

Wed, 05/16/2012 - 15:44 | 2432807 Umh
Umh's picture

There is money to made if you know when the market will go up. A series of predictable ups and downs can be used to make beaucoup money.

Wed, 05/16/2012 - 14:57 | 2432605 q99x2
q99x2's picture

We have just begun the down hill slope compared to the last two. Can't the old Barron Robber Ben Bernank give us a little more time before he starts giving the teachers, firemen and police's pensions away again.

Wed, 05/16/2012 - 15:07 | 2432639 Cycle
Cycle's picture

I'm on a plane and the pilot doesn't like the air speed because it's too close to stall speed.  So instead of making a landing while he still has control, the pilot mangles and munges the air speed indicator and substitutes a glass coaster with 450 MPH written on it with a Sharpy marker, which he proudly shows the co-pilot and a few select myopic passengers who then spread the good word. Don't worry. No problem.

Then I wake up and realize I just dreamt of the last flight of Capt. Ben Bernanke.

Wed, 05/16/2012 - 15:54 | 2432837 nantucket
nantucket's picture

funny stuff.  so you're saying the coaster and sharpy WON'T work?

Wed, 05/16/2012 - 15:05 | 2432642 Father Lucifer
Father Lucifer's picture

I compel you to BTFD!!!!!!!!!!!!!

Wed, 05/16/2012 - 15:14 | 2432673 Shizzmoney
Shizzmoney's picture

And cue:














Wed, 05/16/2012 - 17:29 | 2433136 Matt
Matt's picture

that's more of a linear currency debasement. It really looks more like this:





Wed, 05/16/2012 - 15:21 | 2432706 warezdog
warezdog's picture

Public pensions have always been on the hook one way or another. When private companies loot them or even borrow from them and pay it back are found out those responsible get a paid vaca in a federal pen but apparently it's OK for the Fed, State, or local muni to loot/borry from them.

I would imagine what comes next is private pensions, IRA's, 401K's and the lot, This has got to happen before complete devaluation, I mean you can't let trillions be cut in half BEFORE you decide to pilfer it right? The sorry part is that all liquidity will soaked up like a sponge by one government agency or another before this is all over with the "promise" that everything is still there, of course AFTER the 60% devaluation. Inflation is thru devaluation is the only path left if you are sitting at the top making all the rules and hoarding all the wealth. The signal of the end was when Ben waged war on the savers, without penalty for fiscal lunacy there is no end in sight why Corzine is still a free man is beyond me.

Wed, 05/16/2012 - 15:39 | 2432788 SheepDog-One
SheepDog-One's picture

'Central banks clearly stepping away and letting markets and economies fend for themselves' thats like saying theyre taking the paraplegic and dumping him out of his wheelchair at the start of the NYC Marathon and seeing how he finishes. 

Wed, 05/16/2012 - 15:44 | 2432808 nantucket
nantucket's picture

the only difference this time is that it's not last time, so it's true to say it's different THIS time, other than that there's no difference.  make sense?  aahhh, what's the difference.

Wed, 05/16/2012 - 18:20 | 2433276 markettime
markettime's picture

Organized chaos to suspend elections maybe? 

Wed, 05/16/2012 - 18:40 | 2433310 treasurefish
treasurefish's picture

If only I had saved my dry powder for the Jackson Hole 2010 event....

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